ACCT 209 Study Guide - Midterm Guide: Accrual, Weighted Arithmetic Mean, Accounting Information System

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30 Oct 2014

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Chapter 5: the recording process and the accounting cycle. Journal entries, posting to the ledger, the trial balance. Adjusting entries recorded in the journal, posted to the ledger, adjusted trial balance. Closing entries recorded in the journal, posted to the ledger. Calculate net sales, net purchases, cost of goods sold, gross profit. Understand credit terms (such as 2/10, n/30 or 1/15, n/45) Use cost flow methods (lifo, fifo, wt avg) to find cost of ending inventory and cost of goods sold. Understand impact of inventory method (fifo, lifo, wt avg) on financial statements. Understand effect of inventory errors on financial statements. Estimate ending inventory using gross profit method and retail method. Account- a place or means of summarizing all of the transactions that affect a particular asset, liability, equity, revenue, expense, gain, or loss item. cost of goods sold- beginning inventory plus purchases plus freight in minus ending inventory.

Related Questions

Assume that Dunk Coffee Shop completed the following periodic inventory transactions for a line of merchandiseâ inventory:

Jun.	1	Beginning merchandise inventory	25	units @	$22	each
	12	Purchase	3	units @	$24	each
	20	Sale	14	units @	$34	each
	24	Purchase	17	units @	$28	each
	29	Sale	20	units @	$34	each

1.	Compute ending merchandiseâ inventory, cost of goodsâ sold, and gross profit using the FIFO inventory costing method.
2.	Compute ending merchandiseâ inventory, cost of goodsâ sold, and gross profit using the LIFO inventory costing method.
3.	Compute ending merchandiseâ inventory, cost of goodsâ sold, and gross profit using theâ weighted-average inventory costing method.â (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearestâ dollar.)

QUESTION: Compute ending merchandiseâ inventory, cost of goodsâ sold, and gross profit using theâ (1) FIFO inventory costingâ method, (2) LIFO inventory costingâ method, andâ (3) weighted-average inventory costing method.â (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearestâ dollar.)

Begin by determining ending merchandise inventory and cost of goods sold under each of the three methods.

Requirement 1.
		FIFO

Plus:

Less:
Cost of goods sold

Requirement 2.

LIFO

Requirement 3.

Weighted-Average

Now compute the gross profit under each inventory costing method.

Requirement 1.
		FIFO
Sales Revenue
Cost of Goods Sold
Gross Profit

Requirement 2.

LIFO


	.

Requirement 3.

Weighted-Average

rubyfish762

Background: This is a continuation of the activities at TECHNOGYM in January, 2017. As in past activities, TECHNOGYM uses a Jan. 1 â Dec. 31 financial year.

Exercise for Inventory:

TECHNOGYM uses a periodic inventory system for its normal operations. Following are the unadjusted account balances as of Dec. 31, 2016 for all accounts related to sales and inventory of TechTone products.

Account Debit Credit

Accounts Receivable 17,607,500

Allowance for Doubtful Accounts 20,000

Purchases 85,832,500

Inventory 2,500,000

TechTone Sales Revenue 134,500,000

TechTone Sales Returns 2,017,500

Cost of TechTone Equipment Sold 0

Upper management is contemplating changing the method used to report the cost of goods sold. They will choose the method (either FIFO or DVLIFO) that maximizes operating cash flow. The general ledger has historically been kept on a FIFO basis. Following is the inventory purchases information for 2016:

Purchases for 2016 (normal operations)
Beginning:	5,000	units @	$500	each
Purchases:
Apr-May	40,000	units @	$500	each
Jun-Jul	35,000	units @	$505	each
Aug-Sep	48,500	units @	$515	each
Oct	24,000	units @	$520	each
Nov-Dec	20,000	units @	$535	each

Year-End Physical Inventory Count	38,000	units

Note: For full credit, you must show documentation for both DVLIFO and FIFO calculations, with indication and reasoning for your choice.

Requirement 1: Develop a detailed schedule showing the calculation of Ending Inventory and Cost of Goods Sold using FIFO for 2016.

Requirement 2: Show the adjusting journal entry(ies) (if any) that is/are needed on Dec. 31, 2016 related to FIFO inventory. Remember to show the journal entry in proper form!

Requirement 3: Develop a detailed schedule showing the calculation of Ending Inventory and Cost of Goods Sold using DVLIFO for 2016. Hint: DVLIFO adjustments are calculated at the end of the year, using annual layersânot based on each individual purchase. TECHNOGYM used 1.07 as its DVLIFO index.

DV LIFO	Ending Inventory at Year-End Cost	Index	Ending Inventory at Base-Yr Cost	Inventory Layers at Base-Yr Cost	Inventory Layers at Acq.-Yr Cost	Ending Inventory at DV LIFO Cost	LIFO Reserve Adjustment
2015

2016
2016

Requirement 4: Show the adjusting journal entry(ies) (if any) that would be needed on Dec. 31, 2016 if management decides to adopt the DVLIFO inventory method. Remember to show the journal entry in proper form!

Requirement 5: Using the table below, show the amounts that would appear on indicated line items of the Income Statement and Balance Sheet under the two methods.

		FIFO Method	DVLIFO Method
Income Statement	Cost of TechTone Equipment Sold

Balance Sheet	Inventory

Which method gives higher net income?

Which method gives higher assets?

limekangaroo380

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

Date

Activities

Units Acquired at Cost

4.Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 95 units from beginning inventory and 225 units from the March 5 purchase; the March 29 sale consisted of 75 units from the March 18 purchase and 115 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

Gross Margin	FIFO	LIFO	Avg. Cost	Spec. ID
Sales
Less: Cost of goods sold
Gross profit

I need help filling the table!!

jadehedgehog412

ACCT 209 Study Guide - Midterm Guide: Accrual, Weighted Arithmetic Mean, Accounting Information System

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